One of the first steps in your homebuying journey is getting pre-approved.* To understand why it’s such an important step, you need to understand what pre-approval is and what it does for you. Business Insider explains:
“In a preapproval [sic], the lender tells you which types of loans you may be eligible to take out, how much you may be approved to borrow, and what your rate could be.”
Basically, pre-approval gives you critical information about the homebuying process that’ll help you understand your options and what you may be able to borrow.
How does it work? As part of the pre-approval process, a lender and their underwriter will look at your finances to determine what they’d be willing to loan you. From there, your lender will give you a pre-approval letter to help you understand how much money you can borrow. That can make it easier when you set out to search for homes because you’ll know your overall numbers. And with higher mortgage rates impacting affordability for many buyers today, a solid understanding of your numbers is even more important.
Pre-Approval Helps Show You’re a Serious Buyer
Another added benefit is pre-approval can help a seller feel more confident in your offer because it shows you’re serious about buying their house. A recent article from Forbes notes:
“From the seller’s perspective, a preapproval [sic] letter from a reputable local lender often can make the difference between accepting and rejecting an offer.”
This goes to show, even though you may not face the intense bidding wars you saw if you tried to buy during the pandemic, pre-approval is still an important part of making a strong offer. In fact, Christy Bieber, Personal Finance Writer at The Motley Fool explains it may be the most important part of making an offer:
“Pre-approval maximizes the chances you’ll be able to actually close the deal – and sellers want to see that.
The fact that a pre-approval gives you a better chance of getting your offer accepted is undoubtedly the most important reason to complete this step . . .”
Getting pre-approved is an important first step towards buying a home. It lets you know what you can borrow and shows sellers you’re serious about purchasing their home. Connect with a local real estate professional and a trusted lender so you have the tools you need to purchase a home in today’s market.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Primary Residential Mortgage, Inc and Keeping Current Matters, Inc. do not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Primary Residential Mortgage, Inc and Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.
Grace Tarpley, Laura. “What Is Mortgage Preapproval?” Business Insider, 27 Dec. 2023, www.businessinsider.com/personal-finance/mortgage-preapproval.
Mahoney, Kevin, and Brai Odion-Esene. “Mortgage Preapproval: What It Is and How to Get It.” Forbes Advisor, edited by Jamie Young, 20 Sept. 2022, www.forbes.com/advisor/mortgages/what-it-takes-to-be-preapproved-for-a-mortgage-and-why-it-matters.
Bieber, Christy. “The Motley Fool: This Is the Most Important Reason to Get Pre-Approved According to Dave Ramsey. But Is He Right?” Nasdaq, 6 Jan. 2023, www.nasdaq.com/articles/this-is-the-most-important-reason-to-get-pre-approved-according-to-dave-ramsey.-but-is-he.